Pressure is mounting on the Government to introduce a windfall tax on energy firms after Shell reported record-breaking profits amid soaring oil and gas prices.
The oil giant made a £7.2 billion profit in the first three months of 2022, almost triple the amount it made a year earlier, helping fuel a share price increase.
Its announcement comes just days after rival BP reported its profits had double to £4.9bn and has fuelled calls for the Chancellor to set a windfall tax on oil and gas firms to help ease the cost of living crisis.
The sector is raking in record profits as the cost of oil and gas soars around the world due to renewed demand and supply issues caused by the war in Ukraine. At the same time, households have faced a doubling of energy bills and drivers have faced months of soaring costs at filling stations.
Campaigners are calling on the Government to introduce a one-off levy on the firms making massive profits in order to help fund programmes to ease the cost of living burden.
Chancellor Rishi Sunak has so far resisted such calls, suggesting that a tax could damage investment by such firms, and Prime Minister Boris Johnson has dismissed the idea of a windfall tax. However, Mr Sunak did hint at the weekend that “nothing is off the table”.
BP’s chief executive, Bernard Looney, said none of its existing £18bn investment in the UK would be affected by a windfall tax.
Lib Dem leader Sir Ed Davey condemned the Government’s refusal to consider the move.
He said: “Boris Johnson and Rishi Sunak’s refusal to tax the super-profits of energy companies is completely unforgivable when people are too terrified to heat their homes.
“The excuses of Conservative ministers have been demolished by the boss of BP himself, who said a windfall tax wouldn’t damage investment in the UK.
“This one-off levy would raise billions of pounds that could help vulnerable families with their energy bills now. It is a no-brainer.”
Campaign group Greenpeace said a windfall tax would be the “fastest and fairest way to ease pressure on households feeling the pinch and reduce our dependence on oil and gas”.
Greenpeace UK’s oil and gas campaigner, Philip Evans, said: “By using a big chunk of the bloated profits that Shell, BP and others are raking in to make homes warmer, more energy-efficient and kitted out with heat pumps, the Government could start to really tackle the climate and cost-of-living crises simultaneously.”
Shell’s profits have been driven by its oil production and integrated gas divisions, including liquified natural gas (LNG). Shell is the world’s largest LNG producer and as countries try to cut reliance on gas piped from Russia, demand for the fuel has soared. It has also profitted from a rising global demand for oil and vehicle fuel as industrial production returns to pre-pandemic levels.
Shell has also been less damaged by the war in Ukraine as its operations in Russia are smaller than rivals BP and Total. It still reported writing off $3.9bn as it tries to divest its stake in the Sakhalin-2 LNG project but its Russian operations account for around 5% of its business, compared with 28% for BP.
Its latest profit announcement saw the share price climb more than 2.5% on Thursday morning, to £22.83 per share.